We’ve recently moved into a new financial year and I don’t know about you, but I’m glad about that as it offers the chance of a fresh start, allowing one to get the finances and the paperwork associated with contracting under control.
For many contractors, the admin is the real downside to the job. Having worked as a full-time employee for several years, the change to contracting was like a breath of fresh air. However, I wasn’t prepared for the amount of paperwork that one is required to keep track of and complete.
There is nothing better than having complete control over when, where and how you work. If you have specific commitments you must work around, such as childcare arrangements, then choosing to become a full-time contractor is one of the best decisions you can make.
Seeing specific tasks through to completion is extremely rewarding and something you get to experience time and again when completing short-term contracts. What’s more, you’ll also get the chance to meet loads of new people as you take on projects at different sites.
One of the main advantages that contracting offers is the financial rewards that can be achieved. Clients will often offer higher rates of payment to those working on a freelance basis than they would to salaried employees and this means you can pick and choose the contracts that earn you the most money.
But there’s got to be downsides?
While I firmly believe that the positives far outweigh the negatives when it comes to contracting, it is undeniable that there is a lot of admin that must be completed and there are a number of regulations that must be abided by.
If you have made the choice to become a contractor, you have a decision to make as to whether you will establish yourself as a limited company or utilise the services of an umbrella company.
Both of these options have their own advantages and disadvantages, but generally speaking, the main points are that limited company contractors can minimise the amount of tax and national insurance they pay and use directors loans and dividends to access cash. On the other hand, umbrella contractors have their admin taken care of and will be able to access state benefits such as a pension and maternity pay.
However, this doesn’t mean that if you were to operate through a limited liability company you are left to fend for yourself. There are a number of accountancy services providers that will be able to complete the required administrative tasks and this is something I’d very much recommend unless you are a qualified accountant.
Managing your own accounts is both time-consuming and extremely complex, so enlisting the services of a professional with experience of dealing with contractors is a step that really should be considered extensively.
This will free up a significant portion of your time that you can then use to do whatever you like with, whether that is relax and see your family, indulge in a hobby or even complete more contracts.